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Originally posted on The WordPress.com Blog: One of the main reasons bloggers stop blogging is lack of traffic: at some point, they get tired of being the proverbial tree in the forest, making sounds nobody hears. We’re here to help. No list of advice can guarantee your blog’s success, but it’s important to be…

The Government Shutdown is over. The IRS is processing 4506-T transcripts on a first come, first serve basis. The USDA website is back online. They are working on conditional commitments so we should see those USDA loans start to move through the pipeline. It could be a week or more before the backlog clears out. […]

I share information on this blog to create awareness around the mortgage process. It’s mostly technical. I feel compelled to write about another aspect of home ownership — neighbors. The storm that hit the Black Hills of South Dakota on October 4th, 2013 caught everyone off guard, even mother nature. Heavy fall snow fell early […]

Originally posted on Pretty Work: I’ve been reading through blog posts about the aftermath of last weeks winter storm in South Dakota. I came across a couple of news articles on CNN and NBC News sites. And then I did something I never, ever should have done. I scrolled down to the comments section. Word…

Should I Omit Information? Is that Fraud?

A discussion on ethics grew heated between several staff members a short while ago.

Ethics are subject to the scenario in which they apply. Omitting pertinent information from a loan file is considered fraud, but what if you are omitting information to help make the process smoother for the borrower.

Example: A borrower has a few overdraft charges on his bank statement. It’s clear from other accounts that he has the ability to save money and this appears like a simple mistake.

Overdraft charges, however, are considered a red flag to an underwriter. Questions crop up:

Does this potential borrower have the capacity to budget for a mortgage payment?

Do they mismanage money?

Will this affect their ability to make timely payments?

His loan is otherwise flawless.

Do you omit the bank statement and ask his bank to prepare a verification of deposit (which only shows the current and average balance)?

In this case, you would be omitting any evidence of an overdraft. You won’t have to bother the borrower and the underwriters won’t ask questions.

Do you address the overdrafts upfront but asking the borrower to explain them?

As intrusive as this is, you are also lending them a lot of money. Shouldn’t they be asked about the overdraft and required to explain it?

In life, don’t we all judge these situations on the margin? What are the risks? Is it to great? Will it be construed as fraud? Is it harmful?